we have occasional meetings we -- an occasional meetings. we need focus meetings and focus groups and maybe have baseline information established and see what the general understanding is of what the committee concerns are. during the planning process, we did that. we did the surveys and that is how we did a lot of these projects. that is how we got into this meat and potatoes list of fixing what we have. on going, this week it up over the summer -- we take it up over the summer.

the star within program look and then we began focusing on the outreach that focuses on each progress. >> we are in the third year of the five-year rate increases and there is the planning money that is in here. as we talk about 2013, 14, that is when we would see a lot of rate impact and a lot of work has to be done before that. >> in getting to a point of public except dance, there was a fairly uncomfortable process of getting here and it did result in the end that there was a vote and we said this was something that we wanted to do. at that point, it really legitimizes the rates that followed. it is a question that i don't need answered at the moment but what i want to think about is if

we get a general level of understanding of acceptance, all of the surveys that you have talked about, putting together the program and people who basically had a stake in the answer. >> even one survey with the general public -- >> my guess is that most cannot understand this. we need to get to a point where the rate payers will understand why this is a good idea. >> it would be very handy to go out and say that you have voted for this and we are on hand to get you the rates that we promised you. >> one of the things that gets up there is the rate policy and that was something that we discussed when we were sending the levels of service. what i have in mind for that is

not a policy that says that this is what our rates will be. i am more interested in setting up a process which is just incredibly transparent so that if someone is faced with rate increases, they can know exactly what. there was a decision made when we would spend some money to do something and that is in the increment of rates. if this is part of the progress, this is what we're doing. and this gives us the tools to talk about tools. i'm thinking about how we structure this so this is very transparent. this is not so much from the engineering side but this is for the general management to be talking about as well. that is something that i look

forward to getting into. when we get into the budget, we will have a program which has a whole lot of to the first part of this program. we should think about these rates. >> the rate repairs position which i was pointing to, i take this very seriously. hopefully, i will be around but don't think that will be able to afford to pay those rates in 2039. are you taking into account any productive or preventive

measures which might impact that such as solar or other approaches that we might not have today but might be projected. >> we are not level of discussion, we are at a very broad level. >> what we will do as part of the discussion is to come back and show you what sensitivity there is to changes in inflation. what we have been able to do because of our strong credit rating in particular is to get ahead of the curve on the water assistance program and the construction cost inflation. this is over 5% a year over the planning horizon. also our borrowing costs, we had

a cost of about 3.7 to 3.8%. because we are double credit and so strong, we are able to capture what is a very positive environment. we will come back to you and show you changing the debt- funded program to sit here and this will be put into the pocketbooks of each of the ratepayers. we also do what i don't think any other utility does, we provide 10-year illustrations of what the rates are based upon the capital plan. in addition, we break down those 10-years of projected rates into what specifically in terms of capital and what is because of operating costs. we will continue to do that as

part of our update. as part of our 10-year plan, we did factor in all of these things. 85%-80% needs are part of the capital program. our operating budget is relatively flat. >> the individual rate-payer has to assume some responsibility for access. will these be reflected in these rates at some point? >> they sure will. we've also done an average bill comparison to the monthly cable bill, landline bill, pg&e bill. as currently envisioned over 30 years, this is still projected to be less than your pg&e bill. >> the central bank

announcement this afternoon which i have to follow very carefully, is paid at the municipal bond rates will continue to be beneficial for us? >> we are doing long-term planning at about 5% but we know that our borrowing costs regeneration a los -- our a-- are at generational lows. when we are doing the single improvement program, we set out the bill to our customers. we can give very low rates on a very large improvement program and we're doing with six straight -- fixed rates and we don't have to worry about the volunteer the -- will not have

to worry about the volatility index. when you look at our rates compared to average bills, we have benefited from a very very low-cost average bill comparison. we are the envy of many utilities. >> and the envy of the state as well. thank you. >> do you recall in the projections, was this a general inflationary rate plus the usage difference? >> yes, we have a santa that our program will grow at 5%. the general inflation rate will be 3%. construction costs are at about 5%. we also assume the cost of borrowing at 5%. >> are there any that can be

offset with a cheaper rates? >> on climate change design criteria, how far up as the model and go with climate change? >> right now, we don't have the details the. this is not at the level that we need for hydraulic design. this is speculative. our engineers look at how this changes on a minute by minute interval, we have more like yearly anticipated sea level information, we don't have a great storm information. what we would need to do is to track the intensity during a storm and then possibly update or hydraulic criteria based on

changes to rainstorm density. our information right now is not great. in the past couple we never had salt water coming into the system. there has been an average of 7 inches increase. we have had water doesn't half a dozen or 8 times into our collection system. we don't have the type of detailed information that our engineers can use, that is a problem. each of the basin's so that we can have adaptation. >> i did see anything -- we talked a lot about that a marginal innovation --

we talked a lot of doubt to technological innovation. at this project from start to finish, there should be opportunity to have lessons learned. we have been able to incorporate this into the system. this is whether it is related to climate change. this might be an increase in rates. does that play into the design at risk model? i did not quite understand what would happen. what happens when an innovative project comes along? does it just it plugged in? >> if something was very favorable, we are lucky that we have the experts to be will to

prove this on our turf. then you would get the is designed risks and maybe they're a be a change to the process and then that would get put into the environmental document. i think that we are lucky enough and we have a great enterprise come all the people in the clearwater and the recycle water. it would hard -- it would be hard for me to believe that we have missed something that is why we have the project manager coming on so we have additional expertise. we have done a pretty good job of keeping our finger on the polls. we have participated in various technology conferences and we are paying attention to the new

list of things that come out. if everyone would like their new idea to work in san francisco. >> i want to make sure that there is a flexibility. >> it was modeled to integrate any new technologies. this would make sure that there is the capacity to integrate with that model. >> we want to make sure that that is how the the it is written so it is clear. >> some lend themselves more to that at others. at some point, the system will be set and we will be beginning. this will give us a lot of opportunity as we learn and there will not be that much happening at one time.

the next week and get better, the next week and get better there is a lot of that ability to continue to react. five or six years from now, we can probably start building and the stops and lot of innovation. >> this was exactly part of the discussions said that we can get through this pilot project up front and measured the performance and then implement. you go through people's property and how we implement that will be really challenging. we need a very good public program at that point to work with everyone. >> i also wanted to echo the to indications peace. i'll help that person would come to an agreement.

i want to echo the importance of the communications strategy up front and maybe this is the purview of the communications director. does this include a treatment facility? >> yes, it does aachen. -- yes it does. >> i know that we have talked a little bit about this and this is still a conversation that we should have. >> this is a wonderful treatment facility on treasure island. one of the other questions that had come up all the projects

said that we can note what the most critical projects are. how we will lippi able to make a major rate increase that to the public will not easily absorbed. -- how will we be able to make a major rate increase. we will look at that and maybe you are saying that these are critical projects that we need from next year and these are the ones that we can decide. >> that would be a great discussion for january when i come back to talk about the watershed. i apologize about hunters point. >> sometimes you do this or you don't. you have lots to talk about. >> i would like to keep that

conversation. >> anything else? >> going on the technology common and there is a traditional way that we deal with this is if you have a project design and survey. with the kind of schedule that we are talking about, the need for that will be really more continuous we need to be watching and in some places contributing to technology and development. there's a good reason why there are pilot projects. this is something that we can do actively to keep ourselves up to speed and be ready for those decisions when they come. there is a need for continuing

functions and tracks that will look over the technology. >> every week we have the minimum of one brown bag that one of the teams is attending and they are talking about new technology, savings, public outrage. some weeks we have two and people get upset with me and basically we are learning and is trying to be educated themselves. we do have a stellar group. we bring in an extra piece internationally. we had some people coming in from the u.k. to talk to us about the treatment. there are options for use and

how things are handled. people will not have to travel that conference, it will be here every week. thank you. >> i am mindful of the time. if there's any public comment on this item. please keep it brief. >> >> good afternoon commissioners. i am the director of external affairs. we are here today because we are excited about the -- program. we like to introduce herself to the commission. we are a local and small firm based in san francisco.

we have over 20 years of construction management. we are involved in the clean water program and we here because we are looking at director kelly making comments about the need to fund local small firms to do this work. we are confident that we have the text -- the technical expertise to do this. we understand the needs of the kennedy as well as the needs of the program. we are also competing with this work. we partnered with another local firm and we are looking for to be able to continue to do good work in the city of san francisco. >> thank you. >> good afternoon, commissioners. very exciting to have you here

and here experience on this. -- and your experience with this. we are working to help vulnerable communities. i wanted to speak to the slide about what we learned on this project in a very informative presentation. i want to talk about this with respect to local workers. everyone said this is part of a good presentation. this addresses local consent. i think that we're looking to see a project labor agreement covering this work in this city. this is an important tool. would like to see this advance

through mandatory hiring. there is dissatisfaction within the community. there was also an alliance of good faith efforts of contractors to better babbitt debate band -- to secure work for local residents. we're looking to see a mandatory local hiring provision in this agreement. there is some good news. this is in respect to the mandatory local hiring legislation that has been advanced to the board of supervisors.

the best sign of all that mandatory local hiring will work, this is part of the jurisdiction labor agreement. this came and we have seen a flash of light telegraph across the skies. it said "a union official says that the language makes the legislation acceptable, if only barely. there is local and fear that this can do harm." this has gone from being a potentially fatal illness to a low-grade fever. thank you, everyone. >> thanks. >> can we continue with the

general managers' report. >> there is the resource plan. >> thank you. >> thank you, i wanted to come before you today to give you an update on our efforts to update the plan. as you know, we came before you last in june or july to talk about it and our activities have continued. this is the planning document this city has used to shape our energy policies. this was adopted and endorsed in 2002 and this really provides us guidance on the issues with respect to energy that we need to address to make sure that our

policy initiatives in the energy arena are incorporated into our day-to-day operations. the actions that have taken place since 2002 in terms of the most positive and profound are the closure of the hunters point power plant and its dismantling. today is the first day of declared operations of the trans bay cable project which means that our long-awaited relief from the contract of the power plant will also be to the closure of that facility with no reduction in reliability of electric services. we are a big hurdle.

this is the closure of both of those power plants and this is what the focus of the 2002 plan. since then, the board has urged the pc to update the plan and that is what we have pursued over the past year. the new plan addresses goals which have been articulated by the port and commission since the 2002 plan. most specifically, the interest in san francisco becoming a fossil-free area by the year 2030. what actions has taken to achieve that? well, in our a lecture resource plan, we have some various hearings including hearings lafco.

the rocky mountain institute are the ones who prepared the plan for the city. that is what determines what the feasibility is of achieving the goal by 2030. the results of that report were presented to you in june and then we have taken that report out into the public. there was a heavy reliance on the advisory committee that was formed with the debt assistance and guidance of the power plant taskforce and to really look at how we can take that document and give some life in the near term to its recommendations. so with that, let me focus on some of the near term recommendations. this came from the green check advisory group as well as building on the rocky mountain institute report. the draft a lecture resource plan that we have provided shi'a focuses on the three-year

time frame type of actions that will move us towards the greenhouse gas-free goals. we recognize that san francisco has limited control over energy systems that serve the city, especially the fact that 83% of the energy that is procured to serve san francisco is procured by pg&e or other direct access providers. we are a power provider for our own communities. we have a small fee -- a small piece of the energy procurement decision making. pg&e has the largest piece. they on the transmission system that served san francisco. as you know, they own